Under what conditions can a Brain Balance franchisee assign or transfer their interest in the Franchise Agreement?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
under and sends written notice of its assignment so attesting to FRANCHISEE, the assignment shall operate to release COMPANY from all its obligations to FRANCHISEE under this Agreement from and after the date of such assignment.
16.02. If FRANCHISEE is also transferring its rights in the Standard BB Center to the same assignee, FRANCHISEE may assign or transfer this Agreement, pursuant to the terms of this Section 16. FRANCHISEE may not assign or transfer this Agreement or any rights or interests herein or in the Franchised Business or any assets of the Franchised Business other than in the ordinary course of business or a partnership interest therein, or if FRANCHISEE is a corporation or an LLC, all or part of the equity of the corporation or LLC, except upon COMPANY's prior written consent, which will not be unreasonably withheld. FRANCHISEE must first obtain a bona fide, signed, unconditional, and firm written offer from a responsible and fully identified purchaser and shall submit a complete copy of such offer to COMPANY together with COMPANY's current application for franchise completed by the prospective purchaser. Such offer must be limited to this Agreement and the Franchised Business and may not include the purchase of any other property. Prior to any such assignment or transfer, a right of first refusal to acquire the entire right or interest of FRANCHISEE in the Franchised Business proposed to be assigned or transferred shall be offered by FRANCHISEE to COMPANY on the same terms and conditions offered to the proposed assignee or transferee provided that COMPANY may substitute cash for any form of payment proposed in such offer and provided that COMPANY's credit shall be deemed equal to the credit of any proposed purchaser, and COMPANY shall have not less than thirty (30) days
from the exercise of its option to consummate the transaction. COMPANY shall have not less than thirty (30) nor more than one-hundred and twenty (120) days following the receipt of such offer to exercise its right to purchase.
16.03. If COMPANY does not exercise this right of first refusal, FRANCHISEE may complete the sale to such purchaser pursuant to and on the terms of said offer, subject to COMPANY's prior written approval of the purchaser as provided herein. However, if the sale to such purchaser is not completed within one hundred twenty (120) days after delivery of such offer to COMPANY, or upon substantially the same terms of the sale as specified in such offer, COMPANY shall again have the right of first refusal as herein provided.
COMPANY's written approval of the proposed sale to the named purchaser, if given, shall be conditioned upon the following:
- (a) Only the entire interest of FRANCHISEE under this Agreement may be assigned or transferred, and the entire interest of FRANCHISEE or its affiliated parties in the Standard BB Center must also be assigned and transferred to the same party.
- (b) Unless the assignee or transferee is a franchisee of COMPANY, the assignee or transferee shall undertake and successfully complete COMPANY's Initial Training Program at a location designated by COMPANY at the assignee or transferee's expense.
- (c) The proposed assignee or transferee shall meet the standards then imposed by COMPANY for new franchisees and shall demonstrate to COMPANY's satisfaction the ability to operate the business being transferred. FRANCHISEE shall provide COMPANY with a resume, credit check, and all such other information reasonably required by COMPANY with respect to the proposed assignee or transferee who shall be personally interviewed at a location designated by COMPANY at no cost to COMPANY.
- (d) The assignee or transferee executing both (x) a new 10-year franchise agreement in the form being used at the time by COMPANY for this franchise program, which agreement shall govern the rights and obligations of the parties, provided, however, the purchaser will not be obliged to pay an Initial Franchise Fee, and the Royalty as set forth in this Agreement shall not be altered, and (y) such other documents as COMPANY shall reasonably request in form and substance satisfactory to COMPANY.
- (e) FRANCHISEE shall have paid to COMPANY a Transfer Fee, the amount of $10,000 for the training, supervision, administration, accounting, legal, and/or other expenses of COMPANY in connection with the assignment and transfer. This Transfer Fee shall be collected for the combined transfer of the Standard BB Center and this Franchised Business.
- (f) FRANCHISEE shall have paid to COMPANY all monies due and payable pursuant to this Agreement.
- (g) FRANCHISEE's transferee shall have paid to COMPANY a Software Agreement transfer fee equal to $2,500.
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, a franchisee may assign or transfer their Franchise Agreement if they are also transferring their rights in the Standard BB Center to the same assignee, and they adhere to the terms outlined in Section 16 of the agreement. Brain Balance requires prior written consent for any assignment or transfer of the agreement, rights, interests, or assets related to the franchised business, outside of the ordinary course of business or partnership interest.
Before any transfer, the franchisee must obtain a bona fide, signed, unconditional, and firm written offer from a responsible and identified purchaser. This offer, limited to the Franchise Agreement and Franchised Business, must be submitted to Brain Balance along with the prospective purchaser's completed franchise application. Brain Balance retains a right of first refusal to acquire the franchisee's interest on the same terms offered to the proposed assignee, with the option to substitute cash for any proposed payment form. Brain Balance has between 30 and 120 days to exercise this right.
If Brain Balance waives its right of first refusal, the franchisee can proceed with the sale, subject to Brain Balance's written approval of the purchaser. This approval is conditional upon several factors: the entire interest of the franchisee must be transferred; the assignee must complete Brain Balance's Initial Training Program (unless they are an existing franchisee); the assignee must meet Brain Balance's standards for new franchisees; the assignee must execute a new 10-year franchise agreement and other required documents; the franchisee must pay a $10,000 Transfer Fee; the franchisee must have paid all outstanding dues to Brain Balance; the transferee must pay a $2,500 Software Agreement transfer fee; and the franchisee must not retain a security interest in the franchise, subordinating any promissory notes between the franchisee and purchaser to the purchaser's obligations to Brain Balance.